Biota Holdings Limited has signed a landmark influenza drug agreement with one of Japan's largest pharmaceutical companies, Sankyo Co Ltd. The collaboration and license agreement covers Biota's second-generation influenza compounds (Flunet) and a comparable and competitive Sankyo compound (R118958) that is already in human clinical trials. The agreement consummates a Letter of Intent that was executed between the companies on May 23, 2003.

The second-generation compounds are longer acting than any currently available flu treatments. While the existing drugs need to be administered twice per day, the new drugs may only need to be used once or twice a week, potentially making them useful in the prevention of the disease as well as providing a much more convenient treatment.

Under the agreement, Sankyo and Biota will cross-license their relevant patents and pool their new long-acting influenza drugs into a single pipeline of novel products, which will be offered to prospective licensing partners for further development and marketing. Both Sankyo and Biota expect that all future development work on the compounds will be funded by such licensing partners.

The partnership gives Biota shared rights to a long-acting neuraminidase inhibitor that has already completed a Phase I human clinical safety study, whereas Biota's current compounds are still at the preclinical stage. The development cost to take Biota's preclinical compounds through to the same stage as the Sankyo drug has been estimated at US$4million. Under the agreement, however, the Biota compounds will not need to be developed immediately, but will be retained as back-up compounds, with the focus on accelerating the pathway to market for R118958.

"This is an important partnership for Biota that propels us immediately into human clinical trials, and about 12-18 months ahead of where we would have been with the Flunet program alone," said Group CEO, Peter Molloy.

"It brings together two otherwise competitive programs into a single, robust pipeline of improved influenza drugs, which should be attractive to pharmaceutical companies seeking partnering opportunities. In addition, the agreement effectively combines all the potential partners that Sankyo has been talking to, with those who have shown interest in Biota's drug candidates, giving us a much richer pool of partnership prospects," he said.

The two companies will now form a joint Licensing Committee to conduct the partnering discussions, which will be pursued regionally and worldwide. All licensing revenues, milestone payments, and royalties arising from any partnerships will be shared equally between Biota and Sankyo.